WEST of Shetland pioneer Hurricane Energy has posted a $625 million (£440m) annual loss after slashing the valuation of its oil and gas assets.
News of the loss follows a series of setbacks for Hurricane, which has seen its shares plunge from 60p to around 1p as a result.
Hurricane helped generate huge excitement about West of Shetland after making finds in a relatively under-explored area of granite known as the fractured basement.
It started production from the flagship Lancaster field amid fanfare in June 2019.
READ MORE: Giant West of Shetland field start up welcomed by oil pioneer
However, Hurricane was forced to change its view about the fractured basement after the performance of Lancaster fell well short of expectations. The plunge in oil and gas prices triggered by the coronavirus crisis posed additional challenges for the firm last year. Hurricane’s founding chief executive, Robert Trice, resigned in June.
In the company’s 2020 results announcement, Hurricane said it cut the valuation of Lancaster and its exploration its assets by $567m last year.
Current chief executive Antony Maris noted: “This has been a profoundly difficult period for Hurricane and its stakeholders. The understanding of the West of Shetland fractured basement play has changed significantly. As a result, the potential of the Lancaster field is much smaller than originally thought.”
Mr Maris has said the company now has no realistic option other than to complete a restructuring to help deal with the debt burden it took on when the outlook was brighter.
READ MORE: Hurricane faces boardroom coup attempt
The company has proposed to complete a debt-for-equity swap that will leave the holders of $230m bonds it issued in control of the vast bulk of its shares.
A leading shareholder in the firm, Crystal Amber Fund, has complained that the proposed restructuring will see shareholders almost wiped out. It has called for Hurricane’s chairman Steve McTiernan and four non-executive directors to be removed from the board.
Hurricane directors had proposed to complete the proposed restructuring without allowing shareholders to vote on it. A High Court judge ruled that shareholders should be able to vote on the plan. However, Hurricane noted on Monday that the court could approve a plan even if shareholders oppose it. They will vote on the plan on June 11.
READ MORE: Plans to develop billion barrel oil field off Shetland set to be revived
Hurricane Energy shares closed down 0.08p at 1.22p yesterday, after fetching 60p in 2019.
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